Australia's Foster's Group has seen the highly competitive US market take its toll on 2003 net profits, which fell A$462.9m, down from A$560.9m a year earlier, an 18% fall.

Foster's also said that it suffered a restructuring charge to its beer division of A$105.2m, which was taken to seek extra savings.

The company said normalized net profit, which is adjusted for significant items, amortization, and an accounting treatment of vineyard assets known as self-generating and regenerating assets, rose 9.1% to A$626.7m.

"Foster's has continued its pattern of steady underlying earnings growth, strong cash flows and improved returns, in a business environment that can only be described as one of the most challenging ever witnesses by the beverage industry," chief executive Ted Kunkel said.

However the company also said that the US wine market would continue to remain a challenging area in 2003-04. The strength of the Australian dollar and a glut of cheap wine meant earnings from Foster's wine division slumped in the second half of the year

There were some signs of an improvement. Kunkel said this year's California harvest could be down by around 5-7% on 2002 and the premium wine surplus was drying up.

"We believe we are currently near the bottom of the cycle in terms of oversupply," he said at a breifing.

But Kunkel also said that while the company would aspire to double-digit growth in normalized earnings a share in the current environment, "this will be difficult".

In 2004 a fiscal growth rate similar to this year's 7.8% increase in normalized EPS to 30.4 Australian cents, is more likely.